From Robert Samuelson’s column in today’s Washington Post:
We are at the endgame for housing. Until recently our national motto has been “In real estate we trust.” Just last week the Census Bureau reported that median home prices after inflation rose 32 percent from 2000 to 2005. In some places, the gains were huge: 127 percent in San Diego, 110 percent in Los Angeles and 79 percent in New York. But real estate — which has acted as a national piggy bank, with homeowners borrowing and spending against rising house prices — no longer looks so trustworthy. On this, more than on falling oil prices or a record Dow, hangs the economy’s immediate fate.
Americans used real estate as a national credit card, not a national piggy bank. I don’t like it because it hurts the value of my home through the cumulative effect, but anyone stupid enough to borrow and spend against rising house prices will see no sympathy from me now that the market is finished with this boom. Some expenditures are necessary and probably unforeseen, but many are not. Until sold, though, no home provides any guaranteed value. Homeowners have one house, not $500,000.
As an example, I want an Xbox 360. Standing in my way, my current employment contract expires at the end of the year. I fully expect to have a new contract in place in time to avoid a revenue disruption, but until then, I’ll settle for a frustrating case of adolescent pining. Even when Call of Duty 3 arrives in stores next month, I’ll have to settle for standard definition instead of high definition. That’s if I purchase the game before securing a new contract.
The rest of Mr. Samuelson’s column is reasonable.